Direct marketing of insurance products benefits the insurance consumers by reducing the cost of insurance by way of special discount in insurance premium in lieu of agency commission. The Insurance Regulatory and Development Authority and the insurance companies should permit and promote direct marketing services to individual customers for a qualitative and profitable growth of the industry.

Marketing of insurance policies is done through various market intermediaries who may be individual insurance agents, corporate insurance agents or insurance brokers. They are paid an amount of commission/brokerage by the insurers whenever they are involved in procurement of insurance business. Earlier, in direct marketing of insurance policies, where there was no involvement of any intermediary, the special discount or the direct discount in insurance premium in lieu of agency commission was provided to insurance consumers—particularly in general insurance, some of the personal line insurances and business emanating from the government, public or private sector companies, etc. Further, wherever the amount of loan by the banks or financial institutions exceeded a certain limit, the insured was entitled to direct discount in premium in lieu of agency commission.

The Insurance Act 1938 provides, as per sections quoted below, for the payment of commission to the insurance agents or the intermediaries who procure the insurance business. As per the rules, the commission can be paid by the insurance companies only in the policies where it is genuinely proved that the particular policy has been procured by the personal efforts of a particular insurance agent.

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